Here Are the Ten Corporate Bonds Likely to Lag the Market, According to Gimme Credit

That is a flaw shared by Kraft Foods Inc., Lowe’s Cos., and Target Corp., all household names in bond research firm Gimme Credit’s quarterly list of the “Bottom 10″ investment-grade companies whose debt is likely to underperform the broad market over the next three to six months.

Kraft made the list because it has so far failed to show what its capital structure will look like at the end of 2012 when its proposed plan to split the company is expected to completed, Gimme Credit said Wednesday. Investors are unsure how the company’s considerable debt load will be divided when the company is split.

“I’m sure some details will be provided along the way, but management hasn’t been very clear as to how they are going to capitalize these two,” Gimme Credit senior analyst Dave Novosel said.

Target was slapped for its “risky” Canadian venture to convert up to 220 Zellers stores, which Gimme Credit sees as an expensive move with a distant payout.

“It is paying for the Zellers leasehold interests, remodeling stores and staffing up long before it will actually generate sales in these stores, beginning sometime in 2013,” Gimme Credit analyst Carol Levenson wrote on Nov. 22.

Lowe’s earned its spot on the list for slumping sales, rising leverage targets, and an uncertain home improvement market. Levenson noted that its rival, Home Depot, has outpaced Lowe’s in comparable store sales for nine of the past 10 quarters, and she is unimpressed with Lowe’s decision to borrow money in the bond market to buy back some of its stock.

Gimme Credit’s list of the “Bottom 10″ investment-grade issuers also includes information technology firm Computer Sciences Corp, European banks BNP Paribas and Royal Bank of Scotland, as well as Deutsche Telekom and three natural gas producers: Williams Companies Inc., EQT Corp. and Energy Transfer Partners.

The bond research firm analyzed 400 issuers in compiling its “Bottom 10″ list.

Kraft announced its intention to spin its grocery business off from its snack business in August, just 18 months after it acquired Cadbury, the British confectioner, for about $19 billion and became the second-largest packaged food company in the world by sales.

Kraft chief executive Irene Rosenfeld defended the split at an investor conference earlier this month, saying the grocery and snacks businesses would have different growth profiles and so managing them separately would allow for “peak performance.”

Back in May, Novosel was bullish on Kraft and argued the outlook was “promising” thanks to increased exposure to fast-growing developing markets. He noted better revenue owing to the Cadbury acquisition and said Kraft was on track to achieve $750 million in synergies from the deal. Also, he called it “very impressive” that Kraft could raise prices to offset rising commodity costs.

Plans to split the company changed his outlook significantly.

“It’s not really clear where that debt [from the Cadbury takeover] is going to go and how quickly they will pay it down, because there will be two different entities,” he said.

Comments (4 of 4)

U.S. media reported that U.S. President Barack Obama subsequent week with Israeli Prime Minister Benjamin Netanyahu talks to persuade Israel not to strike at Iran's nuclear facilities within the coming months.
Obama will probably be held on the 5th meeting with all the visiting Minister Benjamin Netanyahu. By then, Obama will persuade Netanyahu to wait patiently the effect played by sanctions against Iran and conscious from the danger of a military strike. The Washington Post quoted a government official said, "We are trying to get Israel to attempt not to produce the decision of a military strike" a condition of anonymity.
The report mentioned that Israeli leaders produced ??it clear that to prevent Iran from acquiring nuclear weapons capability in much less time, however the U.S. is worried that Israel's pre-emptive strike action would trigger a regional war in the Middle East. Israel had decided to attack on Iran will not be issued a warning signal for the Usa, the U.S. government can deny aware of developments in advance, however it also limits the Usa to defend its military installations in the Middle East's potential.In accordance with an opinion poll carried out in January by the U.S. media, most Americans think that financial sanctions and diplomatic way far better than military action against Iran. Therefore, the United states and Israel for the differences in how to handle the Iranian nuclear problem has elevated. Israel believes Iran is creating nuclear weapons and military strikes against the window being closed although the U.S. is no indication that Iran is determined to producenuclear weapons, as well as the serious consequences of military operations, including Iran's retaliation against the United states, the circumstance inside the Middle East instability and the impact in the global economy .

1:23 pm March 8, 2012

ammniiwi wrote :

Tegucigalpa, Honduras (CNN) -- U.S. Vice President Joe Biden vowed Tuesday to help Honduras and also other Central American nations defeat drug traffickers and fight corruption.
But at a meeting with Central American presidents in Honduras, Biden stopped short of supporting a proposal which has gained expanding attention inside the region in recent weeks: drug legalization.
Guatemalan President Otto Perez Molina stated final month that he supported measures to decriminalize drug production, trafficking and consumption. On Tuesday, Central American leaders announced plans to debate the idea at a meeting later this month.
Biden "said that he was in favor of an open and genuine debate in regards to the decriminalization of drugs so long as the procedures and feasible results are analyzed," based on a Honduran government statement distributed to reporters immediately after Tuesday's meeting.
"Resources cannot be wasted if they're not going to achieve concrete outcomes," the statement said, quoting Biden. "Resources should be focused on integrated, conclusive techniques and programs." Right after meeting with Mexican President Felipe Calderon on Monday, Biden mentioned there was no likelihood the Obama administration would change its policy opposing drug legalization, in accordance with Mexico's state-run Notimex news agency.
"In each country which has experimented with the legalization or decriminalization of drug consumption, the component in the population that consumes illegal substances grows," he mentioned, based on Notimex.
In an interview with CNN en Espa?ol final month, Perez Molina defended his position.
"What I've accomplished is put the topic back on the table. I feel it is important for us to have other options and to speak about decriminalization. ... We require to speak about decriminalization with the production, the transportation and, naturally, consumption," he mentioned.
On Tuesday night, Honduran President Porfirio Lobo mentioned Central American leaders meeting in Tegucigalpa "listened with attention and interest for the proposal of the president of Guatemala about the look for option mechanisms for the fight against drug trafficking" and would debate the concern at a meeting in Guatemala on March 24.
Honduras is really a crucial drug trafficking corridor and has the world's highest murder rate, with 82.1 murders per 100,000 inhabitants in 2010, according to the United Nations Workplace of Drugs and Crime.
Lobo along with other Central American leaders have repeatedly argued that drug use in the United states fuels escalating violence throughout the region.
On Tuesday, Biden told reporters the Usa "shared responsibility" but in addition noted that Central American countries should perform to quit drug production.
He pledged that the Usa would offer financial help and coaching to Honduran law enforcement and judicial officials.
"One from the areas in which we are going to hopefully be of support is in vetting the police, the prosecutors and the judges," Biden stated. "My expertise has been: The men and women from the nation have to be in a position to have self-confidence inside the integrity of every single of those institutions, if progress is going to become produced."

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